Raams and Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2000] AATA 121

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S1999/265

General Administrative DIVISION )

Re VERONICA RAAMS
Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date18 February 2000
PlaceAdelaide

Decision Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.

(Signed)
J.A. KIOSOGLOUS
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Parenting Payment – income maintenance period – method of calculation – policy considerations – quantitative not qualitative
Social Security Act 1991 s.1068B
Re Secretary, Department of Social Security and Smallacombe (1991) 23 ALD 141

REASONS FOR DECISION

18 February 2000 Senior Member J.A. Kiosoglous MBE

This is an application for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 25 May 1999 (T2) which affirmed the delegate's decision of 18 February 1999 (T9) as affirmed by an authorised review officer (ARO) on 9 April 1999 (T12) to raise and recover a debt of Parenting Payment.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T16), together with 2 exhibits lodged by the applicant (Exhibits A1-A2) and 4 lodged by the respondent (Exhibits R1-R4). The applicant was accompanied by her husband, Mr Pieter Raams, who spoke to the Tribunal on her behalf and the respondent was represented by Mr Ray Kilderry, a departmental advocate.
The issue before this Tribunal is the effect of the application of the income maintenance period provisions upon the applicant. Mr Raams, on behalf of the applicant, indicated that she did not wish to pursue the issue of waiver, but to rely on his interpretation of how the income maintenance period should be applied as the sole grounds for the appeal.
history of the matter and agreed facts
The applicant was in receipt of Parenting Payment and Family Allowance during the relevant period. The applicant received a letter dated 31 July 1998 (T3) advising (inter alia) that she needed to advise the respondent if:
"You or your partner receive … unused leave payments because you have ceased employment."
Her husband, Mr Pieter Raams ceased employment on 23 October 1998 and received a lump sum payment for unused leave entitlements on 29 October 1998 (T4/23), an event that gives rise to an "income maintenance period" (IMP).
On 18 February 1999 the delegate decided that the IMP should have been applied commencing on 29 October 1998 and raised a debt accordingly for the period 5 November 1998 to 28 January 1999. The applicant does not dispute that the debt was correctly raised, except insofar as Mr Raams, on her behalf, challenges the method of IMP calculation.
The delegate's decision has been affirmed upon review by the ARO and the SSAT, the latter of whom stated (inter alia) in their reasons for decision:
"The Tribunal finds that on 29 October 1998 Mrs Raams' partner received a leave payment after termination of employment and that payment was equal to 11.7 recreation leave days and 66 long service leave days. By the calculation of the Tribunal the 11.7 recreation leave period starts on 29 October 1998 (date of receipt of payment) and ends on 12 November 1998. The long service leave commences the next day on 13 November 1998 and ends on 17 January 1999. The effect of section 1068B-D10 is that Mr Raams is taken to have received ordinary income for the period 29 October 1998 to 17 January 1999, …
…
… The Tribunal finds that the circumstances of the matter before it are not sufficiently unusual, uncommon or abnormal to constitute special circumstances …"

legislation

Section 1068B-D10 of the Social Security Act 1991 (the Act) provides:
"1068B-D10. If:
(a)a person's employment has been terminated; and
(b)the person receives a leave payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the leave period to which the payment relates."

applicant's contentions

Mr Raams gave evidence and made submissions, on behalf of the applicant, such that reference herein to "the applicant" is a reference to his evidence and submissions. Mr Raams worked with the Department of Social Security from about June 1991 and worked in a part-time capacity from about February 1995 onwards. At the time of his acceptance of the redundancy he worked 14 hours or two days per week.
He submitted that the IMP should be calculated so a person is treated as if they had continued working. In his case, he submitted the IMP should be calculated on the basis of his ordinary fortnightly income prior to the redundancy, and that this figure should continue to be used to determine the length of the IMP. This means that the deemed income of Mr Raams for the IMP would be $536.40, instead of the $1050 per fortnight deemed by the Department. The period of the IMP would be necessarily longer on this basis in Mr Raams' submission.
He submitted that s.1068B-D10 of the Act was clear in its intent to calculate ordinary income as being equal to the leave period, such that an ordinary income of two days per week should be equal to a leave period calculated on the basis of two days per week.
The applicant contends that the method of application of the IMP provision is unfair, unclear and discriminatory. In particular, the applicant contends that the method of application discriminates against part-time employees, and contradicts the intention of the Act. He submitted that the Explanatory Memorandum and Second Reading Speech (Exhibit R4 also see paragraph 17 and 18 herein) relating to the relevant provisions are in support of his contentions.
The applicant contends that it is unfair that the letter dated 31 July 1998 does not inform Mrs Raams as to the method by which the IMP is applied. He referred to the explanation on the letter under the IMP heading (T3/21) wherein it is stated (inter alia):
"… The leave payment is spread over the number of days for which it is paid."

and submitted that it is implicit in this that the intention of the legislation is for the income used to calculate the IMP to be treated as if it had been earnt in the worker's "ordinary way", which was two days per week in his case.

In his submission, a person should not be put in a worse position than when they were employed.
respondent's submissions
Mr Kilderry submitted, on behalf of the respondent, that as a result of the information regarding the annual leave payments, ss.1068B-D10 to 1068B-D17 of the Act were brought into being, and a debt raised accordingly.
He submitted that the clear intent of Parliament is to encourage self-provision and self-reliance, and that the respondent's method of calculating the IMP supported this approach.
He referred to the Second Reading Speech by The Hon Philip Ruddock MP in relation to the 1996 Social Security Legislation Amendment (Budget and Other Measures) Bill 1996 (Exhibit R4) wherein it was stated (inter alia) at p3:
"First, the unused annual leave waiting period will be abolished and replaced with an income maintenance period. The new income maintenance period rules will ensure that leave payments are treated as income from the date of payment over a period equal to that for which the leave refers and apply to newstart, sickness, partner, widow and parenting allowances."
He also referred to the Explanatory Memorandum to the same Bill circulated by the authority of The Hon Jocelyn Newman, the then Minister for Social Security (Exhibit R4), at p43, wherein it was stated (inter alia):
"Part 1 of Schedule 7 provides for the abolition of the annual leave waiting period in all payment types where it occurs. The annual leave waiting provisions are replaced by an 'income maintenance period' which provides for leave payments (including accumulated leave payments such as long service leave and sick leave and leave payments that arise as a condition of service such as maternity leave) to be treated as income from the date of payment over a period equal to that for which the leave is calculated.
…
These changes encourage self-provision and self-reliance rather than the expectation of immediate income support."
He submitted that it was not appropriate to work out the IMP based on working hours immediately prior to the person leaving work. He further submitted that as people work many various days or hours per week, the relevant issue is the available money for that person to provide for themselves for the initial period after ceasing work. The respondent's policy is to therefore use a uniform 10 day fortnight for calculating all IMPs.
In his submission, it would be unfair to full-time workers to enable part-time workers to double the length of their IMPs because they had worked part-time and thereby be eligible for higher rates of Parenting Payment during the IMP than would be available to the full-time workers.
He made submissions on special circumstances, despite the applicant not placing any reliance on those provisions, stating that there are no special circumstances in this case so as to warrant waiver, and noted in particular that the application of legislative provisions cannot be considered to be special, referring the Tribunal in this regard to Re Secretary, Department of Social Security and Smallacombe (1991) 23 ALD 141 at p144, wherein the Tribunal commented (inter alia):
"A special circumstance is unlikely to exist, in isolation of any other factor at least, simply by reason of the application of a legislative provision. Even where the effect of a legislative provision may be harsh or unjust the Tribunal is bound by the clear intention of Parliament."

discussion and findings

It is apparent to the Tribunal from the parties' and the Tribunal's own research that this particular question relating to IMP calculation has not arisen since the introduction of the amending legislation assented to on 23 December 1996.
What is before the Tribunal then, is the task of determining the correct method by which to calculate the IMP of Mr Raams. If Mr Raams is correct and it should be worked out on the number of hours per week a person worked, then Mrs Raams would not have accrued a debt of Parenting Payment, as the deemed income would be equivalent to Mr Raams' pre-retirement wage.
Mr Kilderry put forward the question of what to do with a worker who has worked full-time for 20 years and works part-time for one year prior to early retirement. Relying on the number of hours worked immediately prior to separation in that case to determine the IMP would not result in a realistic reflection in the IMP of the period in which leave entitlements accrued.
Mr Raams contended that what needs to be determined is a person's "ordinary" working hours. The difficultly with that approach is that determining Mr Raams ordinary working hours is not easy. Over his 7 years 4 ½ months with the Department (as Ms P. Keighran, a Centrelink Human Resources Officer, Records), he worked 37.5, 30, 27, 15 and 14 hours per week at various times (Exhibit R3). Leave entitlements are based upon the number of working days or hours a person works. The average hours per week for the period of Mr Raams' part-time work is 15.48 hours (Exhibit R3), but he was also a full-time employee for approximately four years. To determine the IMP in the manner the applicant contends, (that being based on Mr Raams' ordinary income over the period for which the entitlements accrued) would necessarily involve making a determination of his average working hours over the entirety of the period. This method would be the only fair way to achieve a balance between someone in Mr Raam's position and Mr Kilderry's fictitious worker with twenty years full-time and one year part-time work. Mr Raams "ordinary income" or "ordinary working hours" cannot be said to be $536.40 or 14 hours per week, as this is only the "ordinary" state of affairs in the last 9 months and 5 days of his employment with the Department.
Mr Raams submitted that his fortnightly income figure at the time he left employment of $536.40 should be used in calculating the IMP. However, to do so would not create equality between the IMP and the period for which leave accrued, for Mr Raams earned more than that for much of the 7½ years he was with the Department.
Section 1068B-D10 stipulates that the IMP must be equal to the "leave period", and this cannot be said to be equivalent of the ordinary "working period". "Leave period" in this context is reflected in the calculated leave entitlement of a person based on their period of service.
The "leave period" in this case comprised the annual leave component (based on the unused credits equal to the ordinary hours of duty in a 4 week period for each 12 months of service and 6.20557 days pro-rata as part of the redundancy package) and the long service leave component (based on pro-rata period of 66 calendar days as part of the package). The respondent gave regard to just 47 days of the 66 long service leave days, in only counting working days.
The dispute that arises is whether the number of days comprising the leave period should reflect in the IMP as consecutive working days or at the rate at which the person ordinarily accrued them, which in this case would mean the average number of days worked per week by the applicant over the course of his employment with the Department.
The Tribunal is assisted to some extent by the policy outlined in the Explanatory Memorandum and the Second Reading Speech (Exhibit R4). From the Tribunal's perspective, the premise of the legislation is straightforward. If a person receives an amount of money, they are expected to live off that money before claiming social security benefits. To that end, where a person receives monies, the Department uses its legislation to impose a period which says, in effect, "we have determined you can live off the money you have received for … period of time", after which, it would be reasonable to allow that person to rely on social security benefits. This policy is reflected in other parts of the Act also, as in those sections relating to receipt of lump sum workers' compensation payments with an economic component to them. Whilst social security policy may not always be clear and consistently reflected in the Act, it is at least apparent that this policy of exhausting other available funds appears elsewhere in the Act.
With this legislative policy in mind, the Tribunal considers that the phrase "equal to" used in section 1068B-D10 of the Act as it relates to the word "period" does not import the necessity for the periods to match on a week to week distribution of hours, but rather relates to a comparison between the total period of entitlement and an equivalent number of days spent in the IMP. It relates to the period of leave and not the manner in which it accrued. In this sense it is quantitative not qualitative, in that the concern is the amount of days and not in the way they are distributed.
To calculate IMPs on the basis of a 10 day fortnight is sensible in the Tribunal's opinion and does not discriminate between part and full-time workers. Its premise is founded in the legislative intent, that being to exhaust available funds before the payment of pension. A part-time worker, may receive $5,000 and a full-time worker $15,000, but the policy applies in the same manner, given that both will have to survive off that money for a certain period before becoming eligible for benefits. It will simply be the case that the full-time worker in such an example will have to survive for longer.
Mr Kilderry was unable to answer the Tribunal's question as to whether Mr and Mrs Raams would have been eligible for any other benefit during the period of the IMP, but it was Mr Raams' understanding in any event, that he would be ineligible for Newstart Allowance until the expiry of the IMP. To double the length of the IMP for part-time workers who worked, for example, a 5 day fortnight would be discriminatory, and that would be the effect of what the applicant is seeking. By Mr Raams' own admission at the hearing, had the IMP been imposed on the basis of a deemed income of $536.40 per fortnight as opposed to the $1,050 per fortnight, although eligible for higher rates of Parenting Payment, the Raams would have been worse off in that Mr Raams would have been unable to apply for Newstart Allowance until April 1999. As things stood, he was able to apply in January 1999. One could imagine a worse case scenario using the applicant's approach whereby a person has worked part-time for 20 years, and another full-time for 10 years, both have the same leave entitlements, but the part-time worker has twice the IMP, albeit at a lower deemed rate.
It would be an unnecessary complication in the Tribunal's opinion to expect the Department to calculate the average fortnightly hours and income of every worker who receives leave entitlements and work out an IMP which corresponds with such average hours per week, and indeed this would appear to run contrary to the intention of the Act. The Explanatory Memorandum notes in particular the concern that people should be self-reliant upon receipt of monies before turning to social security for assistance. Treating all recipients on the basis of a 10 day fortnight for the purposes of calculating the IMP is far from discriminatory, instead ensuring that all people who receive a sum of money exhaust that sum before turning to social security. To impose IMPs in the manner the applicant contends would be to allow some workers to continue to receive benefits such as Parenting Payment at a higher rate at a time when they have other monies available whilst insisting that other workers (such as full-time workers) live solely off their leave entitlement money before accessing the same level of benefit.
For these reasons, the Tribunal is satisfied that the IMP was correctly calculated in this case, on the basis of a 10 day fortnight and so finds. This means that the applicant was not entitled to receive the higher rate of Parenting Payment in the relevant period and has been overpaid, giving rise to a debt and the Tribunal so finds. The Tribunal has carefully checked the calculations of the respondent and is satisfied as to the correctness of the IMP and the period of the debt.
Mr Raams did not wish to argue waiver on behalf of the applicant and in the absence of any circumstances of hardship or otherwise, the Tribunal can see nothing other than the effect of the application of legislative provisions. This in itself does not give rise to circumstances warranting waiver and the Tribunal so finds.
decision
For the above reasons and pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.
I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  7 February 2000
Date of Decision  18 February 2000
Counsel for the Applicant        Mr P. Raams (husband)
Solicitor for Applicant               -
Counsel for the Respondent    Mr R. Kilderry
Solicitor for the Respondent    Centrelink

[2000] AATA 121

18 February 2000

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Judicial Review

Statutory Interpretation

Social Security